How do population agglomeration and interregional networks improve energy efficiency?

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This study investigates the impact of population agglomeration and interregional networks on the energy efficiency of the Japanese industrial and commercial sector. The empirical analysis employs a stochastic frontier model and reveals a nonlinear relation between population agglomeration and energy efficiency. External diseconomies prevail until reaching a threshold level of agglomeration; when the threshold is exceeded, external economies come into play. Enhanced accessibility is found to significantly increase energy efficiency. These results suggest that policies aimed at strengthening regional agglomeration and interregional networks can greatly contribute to improving energy efficiency.

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